TVS Motor: A bumpy ride so far

Apache two-wheeler maker TVS Motor Company has to navigate through bumpy road during the first quarter of fiscal year 2021, due to the Covid-19 pandemic. Its first-quarter operations showed a loss led by sharp fall in revenue

TVS posted a net standalone loss at Rs 139.07 crore for the quarter ended June 30. It had posted a net profit of Rs 142.30 crore in the corresponding quarter last year

Revenue from operations plunged 67.96% on year to Rs 1,431.73 crore during the quarter under review

Overall two-wheeler sales including exports was 2.55 lakh units during the quarter, against sales of 8.84 lakh units reported in the same quarter last year. Motorcycles registered sales of 1.19 lakh units and scooter 0.82 lakh units

It recorded a steep 71% on year decline in sales volumes as dealers shuttered during the pandemic. The domestic market sales were hit harder and fell by 74%. The fall in exports was lower at 61%

The average selling price on its products during the quarter due to higher costs for the BS-VI transition. This aided in revenue growth in Q1, which in fact came marginally ahead of the Street’s estimates. Overall, revenue growth still contracted by about 68% on year

Gross margins contracted 90-basis points quarter on quarter to 24.1%, weighed by a weaker product mix and the impact of BS6 cost inflation as contribution margins are yet to be passed through

On the positive note, a demand recovery is expected in the second half of the year led by rural. TVS product improved product profile, which includes mopeds, have started to fare well, post the BS-VI launch.
Mdeanwhile TVS Motors drive towards premiumisation, though, has take a backseat for a few quarters, but that could pick up pace post the pandemic.

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